Selling a business is a complicated process involving many variables. Aston Lark has put together some points to keep in mind if you’re thinking about selling your company.
The selling of your company is typically the culmination of your business efforts. When you’re ready to move on or retire, you’ll want to get as much value out of your business as possible. Selling a business is a hard process that involves many variables. Here are some things to think about while selling your company:
Is there a market?
To sell something, you’ll need at least one interested buyer, so consider who your customer might be and how you want the transaction to go. Do you want to sell and retire right away, or do you want a gradual transition with you remaining involved? These two solutions may appeal to different types of buyers.Research your competition or the clients to whom you provide services. Our clients have frequently purchased one of their primary suppliers in order to retain a supply chain. Timing is essential when it comes to selling a business, just like it is when it comes to selling a home or a car, so make sure you pick the right time to enter the market.
Communication is integral
Selling a business may be a stressful experience for all parties involved. The goal is to ensure early and open communication between directors and staff.
Some phases of the process will require discretion, but when the time comes, make sure the rest of the company hears it first from you and that you take the time to answer any questions they may have.
You should be speaking with your insurance broker and seeking advice at this point, just as you would with your other professional advisers such as solicitors and accountants.
Get your books in order
Buyers will require precise financial information as well as information about your other assets, such as human capital and plant/machinery. Prepare to deliver this information and try to make it as simple as possible. The utilisation of an online data room could be advantageous in this situation.
If your insurance portfolio isn’t proficient, the buyer may be concerned about your risk management approach. If you can improve it by including Transaction Liability insurance, this could help you achieve a smoother exit and provide both parties with confidence in the seller’s warranties and indemnities.
You should also consider run-off coverage for any claims made policies, the most important of which is management liability. A change of control clause is included, which will be triggered by the majority of transactions. When you notify your insurance broker that you’re considering selling your company, they should raise these two points with you.
Consider how potential buyers will perceive your business
Ascertain that your company’s valuation is feasible in light of current market conditions and that there are willing purchasers. Consider the great and unfavourable aspects of your company and how you may maximise and reduce/remove them, respectively.
Prepare yourself for the upcoming negotiations. Take some time to mentally prepare yourself for the process, as you may have started the company and, while it may be the ideal time to sell, it will not be without emotion.
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